medium · Volume Spread Analysis wyckoff-phases-schematics
A stock gaps up from $78 to $81.50 following a positive earnings report. The stock has been rallying for several months and is at new highs. The day ends with a narrow spread, ultra-high volume, and a close near the daily low.
How should a practitioner classify this gap?
- An absorption gap where professionals are buying the 'sell-the-news' orders.
- A strong gap-up indicating the start of a fresh bullish leg.
- A weak gap-up designed to trap retail buyers into professional distribution.
- A breakout gap that has successfully cleared old resistance areas.
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